Marcel Salikhov, President of the Institute for Energy and Finance, commented to The Bell (listed in Russia as a foreign agent) about an article by American economists on the consequences of introducing a price cap on oil.
Marcel Salikhov gives the main practical conclusions that the authors of the article draw:
It is advisable to reduce the price cap to about $45 per barrel. This will lead to a decrease in the "wealth" of Russia and increase incentives to rise production;
It is necessary to discourage the creation of the shadow fleet in order to increase the long-term effectiveness of the price cap.
According to the expert, there are some difficulties with these arguments:
First, Russia is pursuing a strategy of voluntary production cuts. Moreover, it does it together with the OPEC+ countries. That is, Russia is also pursuing its own policy, which aims to counteract the price cap mechanism.
Secondly, it is rather difficult to assess the effectiveness of the price cap mechanism due to the fact that Urals prices were below $60 per barrel most of the time it was in effect. On the one hand, it can be argued that it was the price cap that led to this, but it seems to me that these are still more global factors.
Thirdly, the implementation and control of the price cap by Western countries has already declined significantly in recent months. In particular, this is evidenced by the fact that freight rates for the supply of Russian oil to India have decreased by about half since the beginning of the year.
Finally, now Western shipping companies account for less than 30% of Russian oil shipments, about 20% are transported by Russian companies, the share of the so-called “shadow fleet” (registration under a flag of convenience, no data on ultimate beneficiaries) is about 30-40%. It will probably grow in the future. It is not very clear how Western countries can seriously impede this process.
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